The finance ministry has proposed to take over the management of the Enterprise Arrangement and Development Support Fund from the State Capital Investment Corporation (SCIC) to improve its efficiency.

This is part of the proposed amendments to Government Decree 59/2011/ND-CP about the transformation of state-owned enterprises into joint stock companies.

According to Deputy minister Tran Van Hieu the fund is currently under the direct management of the SCIC, and the finance ministry is in charge of supervising fund management. But it is difficult for the ministry to actively monitor revenues, expenses and balances of the fund.

This management model makes administrative procedures more complicated and must be changed as the government is speeding up efforts to simplify administrative procedures and improve the business climate.

The ministry has also proposed that proceeds from the privatisation of state-owned enterprises be paid to the fund, which is important to prevent loss-making parent companies from using it to compensate for the losses.

The draft decree also reportedly proposes a new method, book building, for initial public offerings, besides auctions, underwriting and direct deal. Book building is popular for efficient price discovery, which will improve the chances for the IPO’s success.

Recent statistics have revealed that though around 96 per cent of state-owned enterprises have begun their equitisation to date, the state capital equitised remained low at eight per cent. — VNS